Off to the green mountains of Vermont so I am finishing this month’s report a bit earlier. Hope you to taking some time to enjoy summer, although with the heat we have seen here in the Northeast we seem to spend more time inside then normal for the summer months.
Just a reminder that the IMUA webinar on Truck Broker’s Legal Liability will be held on August 13, 2013. You can view the program and register at www.imua.org
CABs LABs – One of the popular features on the CAB Report, the interactive Radius Map tool provides users with a geographic view of where and when a motor carrier’s vehicles were inspected as well as the ability to confirm the true extent of the carrier’s operating radius. Until now, the map was limited to displaying the states in which the inspections occurred. This month we’ve rolled out the option to drill down into an individual state by clicking on the state’s truck icon to view the specific counties where the incidents took place. Users who would like to quickly view a detailed list of the occurrences can do so by clicking on the county markers. As an added benefit, for those users that have identified specific hot zone areas, the markers showing the location of the inspections or accidents will be red in cases a hot zone occurrence. As always, to learn more about these new features please download a copy of our new user guide or contact us.
This month we report:
DOT SECRETARY FOXX – Anthony Foxx, the former Mayor of Charlotte, N.C. is now the U.S. Secretary of Transportation. Secretary Foxx has indicated that safety will remain the top priority of the department and indicated that he looks to improve the efficiency and performance of the current transportation system while building a better infrastructure. In other political news, Rep. Eleanor Holmes Norton of Washington, D.C., will take over for Peter DeFazio of Oregon as the ranking Democrat on a congressional subcommittee that oversees trucking and surface transportation in the U.S. House.
FILING LIMIT INCREASE? – Rep. Matt Cartwright, D-Penn., has introduced legislation that would raise the required insurance minimum for motor carriers from $750,000 to $4,422,000 per truck, an increase of almost 500 percent. According to Rep. Cartwright the current minimum of $750,000 fails to perform the basic functions that Congress intended: to promote safe operations by holding insurers responsible for inspecting trucking operations prior to underwriting policies and to protect the public. He stated that a recent study conducted by the Trucking Alliance, showed that 42 percent of the dollar settlements paid by trucking companies between 2005 and 2011 for motor vehicle accidents exceeded the minimum insurance requirement. The bill would also tie the future insurance minimum requirement to the cost of medical care inflation.
CARGO THEFT – FreightWatch International has updated its 2nd quarter report due to delays in incident reporting. Totals for this quarter are expected to surpass those of the first quarter of 2013. In the second quarter of 2013, FreightWatch recorded a total of 194 thefts in the U.S., with 45 instances in April, 66 in May and 83 in June. The average loss value per incident during the quarter was $164,594, a 27 percent increase in value and a 12 percent decrease in volume, compared with the same timeframe in 2012. Compared with the first quarter of this year, it represents a 4 percent increase in value and a 15 percent decrease in volume.
NAFTA UPDATED – The pilot program designed to allow Mexican drivers to operate in interstate commerce in the U.S. has been authorized by the Court to continue operations. The U.S. Court of Appeals for the District of Columbia Circuit denied petitions by the Owner-Operator Independent Drivers Association and the Teamsters union to declare the program illegal. The court found that Congress decided that the Mexican commercial license would be the equivalent of a state CDL and that Mexican protocols meet the requirements for U.S. motor carriers. OOIDA has sought a rehearing on the decision.
HOURS OF SERVICE. Despite efforts to stem the implementation of the hours of service rules while the battles over the rules continue, the rules have now gone into place, effective July 1, 2013. The new hours-of-service final rule:
Limits the maximum average work week for truck drivers to 70 hours, a decrease from the current maximum of 82 hours;
Allows truck drivers who reach the maximum 70 hours of driving within a week to resume if they rest for 34 consecutive hours, including at least two nights when their body clock demands sleep the most – from 1-5 a.m., and;
Requires truck drivers to take a 30-minute break during the first eight hours of a shift.
The final rule retains the current 11-hour daily driving limit and 14-hour work day.
Companies and drivers that commit egregious violations of the rule could face the maximum penalties for each offense. Trucking companies and passenger carriers that allow drivers to exceed driving limits by more than three hours could be fined $11,000 per offense, and the drivers themselves could face civil penalties of up to $2,750 for each offense.
Waivers for the 30 minute break rule have already been given for haulers of radioactive material and a second given, for a short period of time, for livestock haulers. That was done due to the excessive heat.
The FMCSA also issued a revised guidance on the conditions that must be met in order for a CMV driver to record meal and other routine stops made during a work shift as off-duty time. The new guidance provides less restrictive language and brings the materials in line with the new hours of service (HOS) regulations. The guidance is effective as of July 12, 2013 and can be viewed here.
DRIVER SAFETY FITNESS – The FMCSA has announced its 9 year plan to create a driver program similar to CSA. Called the “Driver Safety Fitness Determination,” the system would assess severity weights to violations just like the CSA program for motor carriers. The next nine years will see research, tests and proposals for a possible plan. We expect it will be a long fought battle to implement any program.
DRIVER TURNOVER – The ATA reports that driver turnover is rising again. Annualized driver turnover rose 7 percentage points to 97% in the first quarter on both a sequential and a year-over-year basis for large truckload fleets, those with $30 million or higher revenue. At truckload carriers with less than $30 million, the turnover rate of 82% was 11 percentage points higher in the first quarter than the 2012 period and 6 percentage points above the fourth quarter of 2012. The fastest rise in turnover was at less-than-truckload fleets, up to 15%, the highest level since 2005. In addition, the most recent Transport Capital Partners Survey indicates that 65% of carriers noted having difficulty finding qualified maintenance technicians. Additionally, 30% indicated they are having problems filling operations staff and fleet manager level positions.
BROKER BOND LEGAL BATTLE COMMENCED – The Association of Independent Property Brokers and Agents has filed suit in District Court in Florida against the FMCSA over the increase in the required broker bond from $10,000 to $75,000 effective October 1, 2013. The suit alleges that the $75,000 bond amount is arbitrary and “not rationally related to a legitimate government purpose.” Other charges include that the FMCSA violated the Administrative Procedure Act by not conducting required rulemaking when setting the bond amount.
NORTH AMERICAN FATIGUE MANAGEMENT PROGRAM – Canada and the US announced the launch of the NAFMP, a website that provides training and education on commercial bus and truck driver fatigue management. The NAFMP is a voluntary, interactive web-based educational and training program developed to provide commercial truck and bus drivers and carriers with an awareness of the factors contributing to fatigue and its impact on performance and safety. It provides:
Information on how to develop a corporate culture that facilitates reduced driver fatigue;
Fatigue management education for drivers, drivers’ families, carrier executives and managers, shippers/receivers and dispatchers;
Information on sleep disorders, screening and treatment;
Driver and trip scheduling information; and,
Information on Fatigue Management Technologies.
OUT OF SERVICE REPORTS – The list of imminent hazard actions by the FMCSA is shorter this month than it has been recently. But an Alaska licensed bus driver, Steven Forrest McKinley was declared an imminent hazard to public safety and order not to operate any commercial vehicles after being apprehended for DUI while driving a bus with passengers. There was also action against three Chicago area household goods carriers. Aurora, IL based White Glove Relocation Services, Inc. (DOT 2069670) was ordered shut down for safety violations. The company’s operating authority has also been suspended for holding customers’ shipments hostage. Cicero, IL based Able Moving, Inc. (does business as Father & Sons Moving Service) (DOT 1418141) had its operating authority suspended for holding customers’ shipments hostage. Chicago-based Best Price Moving & Storage (DOT 693651) was ordered shut down for safety violations. The company was allowed to resume operations after it fulfilled a corrective action plan. The company has been assigned a federal safety rating of “Conditional” and FMCSA will monitor its safety compliance.
CURRENT CASES
CARGO
It seems like more and more cases involving transportation brokers are working their way through the judicial system. In the District Court in Oregon the Court held that a claim against a broker was not subject to the Carmack Amendment and therefore the forum selection clause in the broker contract was valid. (Infinity Air, Inc. v. Echo Global Logistics, Inc., 2013 WL 3199657).
In the Middle District of Alabama the Court held that a cargo claim against a broker was not subject to Carmack for the purposes of removal. The Court concluded that there was no complete preemption when it came to the broker claim. (Curb Technologies v. Somerset Logistics, 2013 WL 3383128)
Accordingly to the Middle District in Florida, the fact that the risk of loss in a sale may have passed for commercial purposes did not prevent the plaintiff from standing to sue for a cargo loss. The Court did conclude that there was a question of fact as to whether the plaintiff could recover when there was evidence that the plaintiff had misrepresented the cargo in order to obtain a reduced freight rate. (Finance USA Network.com v. Central Transport International, Inc., 2013 WL 3461692)
The Central District in Florida held that a “terminal” in a cargo policy was an ambiguous term and therefore should be construed against the insurer. However, due the various misrepresentations by the motor carrier after the loss, all of which the Court held were material, coverage was denied to the insured. (Essex Insurance Co. v Hartford Fire Insurance Co., 2013 WL 3389549)
The fact that the plaintiff claimed that the defendant never actually intended to timely deliver the cargo in interstate commerce was insufficient to allow an action removed under Carmack to be remanded back to state court. As the shipments were based upon intended interstate moves, the Federal Court in Tennessee had jurisdiction. (Tennessee Wholesale Nursery v. Wilson Trucking Corp., 2013 WL 3283515)
The Northern District in Illinois concluded that a party could not distance itself from the terms of a through bill of lading entered into by a freight forwarder when in fact the party was directly involved with the freight forwarder in arranging the transportation. The Court did not go further leaving open the issue of whether there was limitations of liability which would impact the recovery for a derailment loss. (Kawasaki Kisen Kaisha v. Union Pacific Railroad, 2013 WL 3791609)
While most claims against a household carrier engaged in intestate transport are subject to preemption there are some claims which are not. The District Court in Maryland concluded that when a homeowner had a claim for damage to her home and non-shipped items those claims were not subject to the preemption of the Carmack Amendment. (Gale v Tamar Moving Systems 2013 WL 4776983)
AUTO
If the policy so provides, an offer from an insurance company to pay policy limits, even if conditioned upon a release, will stop the clock running on the post judgment interest. This ruling is from the Appellate Court in Illinois. (Colella v. Occidental Fire & Cas. Co., 2013 WL 3199657)
In another case from an Appellate Court in Illinois, in a very lengthy opinion, the court considered the various issues raised in wrongful death action against a truck driver, his employer, the owner of the truck tractor and the owner of the trailer. The Court held, after considering all of the evidence, that there was sufficient evidence to establish that the trailer owner could be vicarious liable for the driver, but that there was no evidence of a joint venture between the trailer and tractor owners and the driver. The Court also remanded the case for errors in admitting evidence of the driver’s prior bad acts. (Powell v. Dean Foods Company, 2013 WL 33280313)
And finally, one more case from Illinois. The Appellate Court conclude that an insurer of a trucker was entitled to pursue the manufacturer, dealer and maintenance companies involved with a trailer that detached from the tractor and caused an oil spill and various third party and physical damage claims. The Court held that settlement of another action, which resulted in the filing of a dismissal of that suit was not res judicata as to the pending claims. However the court did conclude that the leasing company was an additional insured under the auto policy and under the anti-subrogation rule the insurer was prohibited from seeking recovery from that party. (Maxum Specialty Insurance Group v. McLean County Truck Company, 2013 WL 3147674)
The District Court in Pennsylvania allowed a plaintiff a late opportunity to amend a complaint to allege a cause of action for punitive damages when evidence had been presented of a number of violations of federal safety regulations. (Stemrich v. Zabiyaka, 2013 WL 3377440)
The UIIA Agreement and the Texas Anti-Indemnity statute butted heads this month in the Court of Appeals in Texas. The Court concluded that the anti-indemnity statute applied to the UIIA agreement, that it would apply Texas law even when the UIIA agreement indicated Maryland law, and that the agreement to insure in the UIIA agreement was also subject to the anti-indemnity statute. The Court also considered the fact that while the statute went into place after the execution of the initial UIIA agreement, the indemnity provision was added after the effective date and therefore the statute applied. (CMA-CGM (America) v. Empire Truck Lines, Inc., 2013 WL 3481347)
The Eastern District in Louisiana reversed a plaintiff’s motion for a new trial after a defense verdict in favor of a trucking company and its insurer. The Court upheld the jury verdict that the accident was not the fault of the truck driver, also concluding that a few occasional sleeping jurors, and possible mean faces made by the defendant were insufficient to overturn the verdict. (Bovie-Clark v. Sentry Select Insurance Co., 2013 WL 3242522)
A leased employee of a motor carrier is not entitled to the protection of the MCS 90. The Middle District of Tennessee concluded that the motors carrier’s policy did not cover the carrier’s liability for the fatal accident which killed the leased driver. Efforts to argue that the MCS90 mandated such protection because he was not a true employee failed. (Gramercy Ins. Co v. Expeditions Express. 2013 WL 3761310)
The doctor patient privilege is inapplicable to a patient’s statement made to the ER physician when the patient seeks contribution or indemnity from a co-defendant trucker. The plaintiff’s statements were determined to relate both casually and historically to how the accident occurred and therefore was deemed admissible in Ohio. (Leopold v. Ace Doran Hauling 2013 WL 3750050)
Lease purchase agreements with owner operators are standard in the trucking industry. The Western District of Pa held that the initial owner, who had still not been paid in full could still be held liable for a fatal accident and that its insurer would be responsible under the MCS-90 even though the owner was not involved, at all, in the transportation services being provided at the time of the loss. The Court also considered in great detail the various exposures for each of the involved parties, concluding that plaintiff has proffered enough evidence to allow the case to continue. (Shropshire v. Shaneyfelt, 2013 WL 3666353)
MISCELLANEOUS:
The. Supreme Court in Ct held that the “made whole doctrine” will be the default rule in Ct. The court also concluded that the doctrine does not apply to deductibles which are borne by the insured. The court also noted that parties are fee to contract out of the default rule. (Fireman’s Fund Ins. Co v. TD Bank North Insurance Agency, 2013 WL 38181122)
A motor carrier in the 4th Circuit was happy to have his defense verdict upheld. The court held that the trial courts was correct in allowing for a “missing witness” instruction when the plaintiff failed to appear for trial Plaintiff made a tactical decision not to appear at trial which, in hindsight, was not a good call. (Scott v. Watsontown Trucking Co., 2013 WL 3752602)
Richard Norton was designated as an expert on load securement in an action in the Northern District in Illinois. The court held that his extensive experience in the field was sufficient to raise him to a level to provide expert testimony. (Manjarrez v. Georgia Pacific 2013 WL 3754861)
See you next month.
